DEA revised guidance THE DEPARTMENT for Work and Pensions (DWP) has issued revised guidance for dealing with direct earnings attachments (DEAs). The changes relate to how pension contributions should be considered when calculating net earnings, and how irregular earnings should be calculated. In the original guidance all pension contributions were deducted from gross earnings, along with income tax and NICs, in order to arrive at a net earnings figure. It has now been agreed that stakeholder pensions and free standing additional voluntary contributions are excluded from this calculation. The DWP guidance leaflet therefore now states: “for the purposes of calculating a DEA deduction, net earnings means earnings after the deduction of: income tax; Class 1 NICs; and superannuation contributions.” It assumed that as this definition is consistent with that set out for other attachment of earnings orders (e.g. council tax) developers (and employers) will apply pension/superannuation contributions as set out above. The calculation of irregular earnings has now been amended to bring it into line with the treatment of other orders, such as council tax orders. For DWP leaflets and further guidance visit:
www.gov.uk/government/publications/direct-earnings-attachments-an-employers-guide.
Share schemes THE FOLLOWING returns to be used for tax year 2013/14 have recently been published by HMRC: Form 34 SAYE option scheme (SAYE), Form 35 Company Share Option Plan (CSOP), Form 39 Share Incentive Plan (SIP), EMI 40 Enterprise Management Incentives (EMI), and Form 42 Employment-related securities. HMRC has also announced that it is
changing the way both new and existing employee share schemes and arrangements are administered. The changes affect: EMI, CSOP, SAYE (save as you earn) and SIP schemes; and also any non-tax-advantaged arrangements. From 6 April 2014, employers must register all existing and new employee share schemes and arrangements online. They must also self-certify that any tax advantaged schemes meet certain requirements. HMRC will no longer approve any new tax-advantaged schemes. Employers must self-
certify CSOP, SAYE and SIP to confirm that they meet legislative requirements. If this is not done any tax advantages will be lost. HMRC’s Employment Related Securities service will be part of the PAYE Online for Employers service. To use the service the employer must be registered for HMRC taxes and signed up as an organisation for online services. From April 2015 employers must file all information returns online, and automatic penalties will apply for late filing. HMRC will no longer send a notice to file or reminder. If previously approved schemes arrangements are not registered by 6 July 2015 they will lose their tax advantages.
SEPA postponed THE SINGLE Euro Payments Area (SEPA) is an European Union (EU) initiative to streamline euro payments and direct debits, as well as card transactions. When fully operational SEPA will cover the 28 EU member states plus Iceland, Liechtenstein, Monaco, Norway and Switzerland. SEPA changes the way that payments and collections are handled, reducing more
than fifty file formats and rules down to one single set of file formats and schemes. Anyone making or receiving euro payments is likely to be affected. Organisations making payroll payments in euros, need to be aware of SEPA’s impact. Corporates and banks in the EU will be required to start using the new euro payment and direct debit schemes, from 1 February 2014 for eurozone countries and from 31 October 2016 for non-eurozone countries. Although SEPA formally comes into effect from 1 February 2014, the European Commission has extended the deadline for the introduction of a new faster and cheaper intra-bank payments system by six months to the 1 August, following delays in some EU member states.
18 PayrollProfessional
Payrolled benefits EMPLOYERS SHOULD inform HMRC in advance if they intend submitting a batch of P11D returns for employees who have had all their expenses and benefits taxed via the payroll. They should do this online using HMRC’s online form Notification of Payrolled Benefits. If employers do not do this, their employees will be taxed twice. The entries in the ‘1A’ boxes in the
P11D return normally make up the total value of all expenses and benefits liable to Class 1A NICs, which is then entered in the relevant box in P11D(b) return. However, for payrolled expenses and benefits where there is an ‘amount made good or from which tax deducted’ box, the entries in the ‘1A’ boxes will not provide the correct value on which Class 1A NICs are payable. In these cases the employer will need to recalculate the total value of all expenses and benefits on which they are liable to pay Class 1A NICs, ensuring the actual amount of the expense or benefit included in payroll is used as opposed to the net ‘cash equivalent’ amount after payrolling has taken place. There are separate online returns for employer and agent notification of payrolled benefits. For further information, visit: www.
hmrc.gov.uk/payerti/exb/forms.htm#4.
Plastic money PLASTIC BANKNOTES will be brought into circulation by 2016. The £5 note will be the first plastic banknote, with the £10 note about a year later. As the plastic notes will have smaller dimensions than the current paper notes, their gradual introduction will allow cash machine operators to alter automated telling machines to carry them.
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